The Rhode Island Association of Realtors released their third quarter statistics last week, and to no surprise, distressed home sales are driving the market. More than 1in 4 single-family houses sold in the third quarter were foreclosures or short sales. More than half of all the distressed sales were in Pawtucket, Providence, Cranston and Warwick, with double-digit price declines in these communities. Foreclosures and short-sales drove down the median prices 18% from last year to $230,000, excluding these distressed sales, the statewide median price of houses sold during the third quarter was $268,500.
  One bright spot, the median single-family house price increased in six communities: Barrington, Warren, Providence’s East Side, Exeter, Charlestown and Narragansett.
With more than 4 million homeowners, or 9 % of mortgages, either at least one month behind on their payments or in foreclosure, investors and savvy buyers are starting to get back into the market, so I thought it would be good to have my legal expert Sheila Harrington, from the Law offices of Harrington and Rhodes LTD.  come on the show to discuss the pros and cons of buying distressed properties. The bottom line is there are bargains to be had, but there are pitfalls as well, due diligence and patience seem to be key in getting through the process.
 
This Week’s Real Estate Insight:

If you are thinking about buying distressed property,  you will want to make sure that you are armed with as much information as possible, RealtyTrac is a great place to start your education.

 

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Two positive items came across my desk this week;  The first is that the rate of foreclosures in Rhode Island has started to slow down, according to RealtyTrac, an Irvine California company that tracks foreclosures.  Nearly 1,600 foreclosure filings were made during the 3rd quarter, up 33% from the same period last year, but down 3.7% from the second quarter. Our decline in recent foreclosures may be related to the increase in short sales, 27% of all single family homes that closed in August were short sales or foreclosures, according to the Rhode Island Association of Realtors.

The National Association of Realtors also reported on Friday that sales of existing homes rose by 5.5 % in September compared to August, the best increase since July 2003. Even with the gain in sales, prices kept falling. The median sales price dropped to $191,600, down 9 %. Lawrence Yun, chief economist for NAR, said a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.

The bad news is unemployment continues to rise, putting more downward pressure on sales and prices.  With the post-boom demise of the no doc “liar’s loans”, jobs are once again a requisite for home purchases. And while this might seem like a no brainer, with stricter lending guidelines, more buyers should be able to fulfill their obligations, resulting in fewer foreclosures, and further stabilization in the market.

This Week’s Real Estate Insight:

Will someone create some jobs so I can sell some houses!!!

 

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